Amended in Assembly January 4, 2016

Amended in Assembly April 21, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 326

Introduced by Assembly Member Frazier

February 13, 2015

An act to amend Section 1742.1 of the Labor Code, relating to public works.

LEGISLATIVE COUNSEL’S DIGEST

AB 326, as amended, Frazier. Public works: prevailing wage rates: wage and penalty assessments.

Existing law requires the Labor Commissioner to issue a civil wage and penalty assessment to a contractor or subcontractor, or both, if the Labor Commissioner determines, after investigation, that the contractor or subcontractor, or both, violated the laws regulating public works contracts, including the payment of prevailing wages. Existing law also requires the awarding body, as defined, to withhold from payments due under a contract for public work an amount sufficient to satisfy the civil wage and penalty assessment issued by the Labor Commissioner, and to give notice of the withholding to the affected contractor or subcontractor.

Existing law permits the affected contractor or subcontractor to obtain review of a civil wage and penalty assessment or a notice of withholding, as specified. Existing law provides that, after 60 days following the service of a civil wage and penalty assessment or notice, the affected contractor, subcontractor, and surety on a bond issued to secure the payment of wages, as provided, become liable for liquidated damages in an amount equal to the amount of unpaid wages, as specified. Existing law provides that there is no liability for liquidated damages if a contractor, subcontractor, or surety deposits the full amount of the assessment or notice, including penalties, with the Department of Industrial Relations to hold in escrow pending administrative or judicial review. Existing law requires the department to release those funds, plus any interest earned, to the persons and entities found to be entitled to the funds at the conclusion of all administrative and judicial review.

This bill would require the department to release the funds deposited in escrow plus interest earned to those persons and entities begin delete as expeditiously as possible end delete begin insert within 30 days end insert following the conclusion of all administrative and judicial review.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1742.1 of the Labor Code is amended to
read:

1742.1.  

(a) After 60 days following the service of a civil wage
and penalty assessment under Section 1741 or a notice of
withholding under subdivision (a) of Section 1771.6, the affected
contractor, subcontractor, and surety on a bond or bonds issued to
secure the payment of wages covered by the assessment or notice
shall be liable for liquidated damages in an amount equal to the
wages, or portion thereof, that still remain unpaid. If the assessment
or notice subsequently is overturned or modified after
administrative or judicial review, liquidated damages shall be
payable only on the wages found to be due and unpaid.

Additionally, if the contractor or subcontractor demonstrates to
the satisfaction of the director that he or she had substantial grounds
for appealing the assessment or notice with respect to a portion of
the unpaid wages covered by the assessment or notice, the director
may exercise his or her discretion to waive payment of the
liquidated damages with respect to that portion of the unpaid
wages. Any liquidated damages shall be distributed to the employee
along with the unpaid wages. Section 203.5 shall not apply to
claims for prevailing wages under this chapter.

(b) Notwithstanding subdivision (a), there shall be no liability
for liquidated damages if the full amount of the assessment or
notice, including penalties, has been deposited with the Department
of Industrial Relations, within 60 days following service of the
assessment or notice, for the department to hold in escrow pending
administrative and judicial review. The department shall release
the funds in escrow, plus any interest earned, begin delete as expeditiously as
possible end delete begin insert within 30 days end insert following the conclusion of all
administrative and judicial review to the persons and entities who
are found to be entitled to those funds.

(c) The Labor Commissioner shall, upon receipt of a request
from the affected contractor or subcontractor within 30 days
following the service of a civil wage and penalty assessment under
Section 1741, afford the contractor or subcontractor the opportunity
to meet with the Labor Commissioner or his or her designee to
attempt to settle a dispute regarding the assessment without the
need for formal proceedings. The awarding body shall, upon receipt
of a request from the affected contractor or subcontractor within
30 days following the service of a notice of withholding under
subdivision (a) of Section 1771.6, afford the contractor or
subcontractor the opportunity to meet with the designee of the
awarding body to attempt to settle a dispute regarding the notice
without the need for formal proceedings. The settlement meeting
may be held in person or by telephone and shall take place before
the expiration of the 60-day period for seeking administrative
review. No evidence of anything said or any admission made for
the purpose of, in the course of, or pursuant to, the settlement
meeting is admissible or subject to discovery in any administrative
or civil proceeding. No writing prepared for the purpose of, in the
course of, or pursuant to, the settlement meeting, other than a final
settlement agreement, is admissible or subject to discovery in any
administrative or civil proceeding. The assessment or notice shall
advise the contractor or subcontractor of the opportunity to request
a settlement meeting.